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jazz

Weekly Options

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Hello there,

 

I've been carefully trading weekly options for the past 6 weeks. I was probably lucky, but I couldn't be happier with the results. I was mainly selling index options premium on the day before or of the day of expiration.

 

I was wondering anyone who can recommend a book about weekly options that are practical.

 

Happy trading,

 

Jasmine

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Hello Jazz.

 

I, also, have been selling time premium on the weeklies. I look for trends in the SPY ETF and sell out of the money credit spreads when the market appears to be overbought or oversold. I usually sell a little bit earlier, perhaps with six or seven days remaining, as there is more time premium available.

 

The key is not to get stuck with the short options moving into the money. This can cause a world of hurt. There are numerous adjustment strategies out there, but I prefer using position sizing and stops to avoid the risk.

 

Happy trading!

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Hi,

 

I am also selling option on index products but mainly on futures because they have a much higher credit/margin ratios...

 

I agree, you need to employ some form of adjustment strategies to protect your portfolio. But what I love about selling naked premium is the % of chance that I win.

 

It is more consistent than trying to pick the market directions all the time:)

 

Best regards,

Gery

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Hi,

 

 

But what I love about selling naked premium is the % of chance that I win.

 

 

just to balance it......;)

 

what i love about buying options is when i win those few times i win big.

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Yes you are right, it is just a matter of perspective:)

 

I think from a trading psychology perspective it is much better to win 8 out of 10 times then only profit 2 out of 10 but then big time. But this is subjective and very personality driven thing.

 

I always say everybody has to accept their trading personality and based on that create the strategies.

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Hi, I agree - Prefer selling naked or spreads. Going OTM avoids the need to be correct directionally.

 

Hi,

 

I am also selling option on index products but mainly on futures because they have a much higher credit/margin ratios...

 

I agree, you need to employ some form of adjustment strategies to protect your portfolio. But what I love about selling naked premium is the % of chance that I win.

 

It is more consistent than trying to pick the market directions all the time:)

 

Best regards,

Gery

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Hi Jazz,

 

Selling premium on the last or next to last day can be risky at times. While time decay is eroding quickly, the strike prices you have to choose comes too close to the stock price. At this point, you're just gambling, you could be right or you could be wrong. And if you're wrong, you generally tend to lose a lot more than what you gain.

 

What I suggest is for you to try an alternate - When weekly Options start trading on Thursday, take an Options selling position that afternoon or mid-morning. Premiums will be much higher and you can provide yourself a good buffer zone by going OTM. You'll notice that by Monday, a significant portion of this premium has already eroded (probably more than what you'd have achieved with a last-day trade). If by Monday, your position is still in safe zone, you can try to extend to Wednesday and close the trade. The following day you have a new trade opportunity. This strategy strikes a good balance between risk, time decay and a decent buffer zone. And it gives you sufficient opportunity to adjust, should things work against you.

 

Hari Swaminathan

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On 11/20/2012 at 6:28 PM, hackertrading said:

Hi Jazz,

 

Selling premium on the last or next to last day can be risky at times. While time decay is eroding quickly, the strike prices you have to choose comes too close to the stock price. At this point, you're just gambling, you could be right or you could be wrong. And if you're wrong, you generally tend to lose a lot more than what you gain.

 

What I suggest is for you to try an alternate - When weekly Options start trading on Thursday, take an Options selling position that afternoon or mid-morning. Premiums will be much higher and you can provide yourself a good buffer zone by going OTM. You'll notice that by Monday, a significant portion of this premium has already eroded (probably more than what you'd have achieved with a last-day trade). If by Monday, your position is still in safe zone, you can try to extend to Wednesday and close the trade. The following day you have a new trade opportunity. This strategy strikes a good balance between risk, time decay and a decent buffer zone. And it gives you sufficient opportunity to adjust, should things work against you.

 

Hari Swaminathan

Hari Sir, Any good strategy for Indian Market

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